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Caution dominates SolarWinds trade

SolarWinds has been rallying hard, and one investor is guarding
against a pullback.

optionMONSTER's Depth Charge monitoring program detected the
purchase of 1,500 December 47.50 puts for an average premium of
$1.84. A matching number of December 42.50 puts were sold for
$0.84, resulting in a net cost of $1. Volume was more than 40 times
open interest in both strikes, indicating that new positions were
implemented.

The strategy will earn a maximum profit of 400 percent if the stock
closes at or below $42.50 on expiration. It's known as a
bearish put spread
because it leverages a move between two specific price points. (See
our
Education
section)

SWI rose 3.40 percent to $56.34 yesterday and has more than doubled
in the last year. The maker of network-management software has
repeatedly beaten estimates and raised guidance. Its next
earnings-release date hasn't yet been announced, but last year's
calendar suggests that it will occur in late October.

Overall option volume in the name was 18 times greater than
average, according to the Depth Charge. Puts accounted for more
than two-thirds of the total.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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